Memphis: Cotton Fields, Cargo Planes, and Biotechnology

In Memphis, writes Wanda Rushing, each new wave of development strategies tends to reproduce old patterns of inequality.

Wanda Rushing

University of Memphis

Introduction

Geographic location is one characteristic of place fundamental to understanding the economic structure of Memphis and the city's role as a major distribution node in the global economy. Memphis plays a prominent role, not only because of the city's central east-west geographic location in the continental United States and its north-south location equidistant between Toronto, Canada, and Monterrey, Mexico, but also because of its two-hundred-year history of place-specific decisions, activities, and transformations. The city's geographic location on the bluffs of the Mississippi River near the rich cotton-producing region of the Mississippi Delta and an abundance of hardwood forests and natural resources, along with a tradition of entrepreneurialism and a history of labor-intensive human productivity, supplied the means to drive economic development related to agricultural and industrial production. But a history of selective strategies to promote or invest in some features of place, including geographic location, and to diminish or underinvest in others, such as commitments to public education, has affected the city's approach to economic development in the postindustrial era and its prospects for success as a "comeback city."1

Local development initiatives for producing and marketing agricultural products, enhancing distribution infrastructure, recruiting industry, and promoting professional sports and entertainment have created mixed economic and social outcomes. Some strategies that focus on geographic location have enhanced the city's comparative advantages in transportation and distribution and have generated wealth. But the consequences of those decisions, and others, especially those connected with "selling" Memphis by offering typically southern industrial recruitment incentives, marketing cheap land and natural resources, and maintaining a low-wage labor market, have generated and reproduced inequality. The use of public subsidies and tax abatements to recruit industry and finance downtown redevelopment projects also produces mixed results.

Paradoxically, each new wave of development strategies tends to reproduce old patterns of inequality, generating wealth and power for a few and maintaining the structure of poverty and inequality for many. Patterns of poverty, lack of educational attainment, and limited access to economic opportunities have become enduring characteristics of place. In Memphis, nearly one-fourth of city residents live below the poverty level, a number almost double the US average. When compared to other southern cities, the Memphis poverty rate of 23.5 percent is the same as Atlanta's and greater than the New Orleans 20 percent rate documented before the diaspora set in motion by Hurricane Katrina.2 In public education, the Memphis city schools report a high school graduation rate of 48.5 percent, one of the worst in the United States. Ranked fortieth in graduation rates among the fifty largest public school systems, the Memphis school system lags behind those of Nashville, Charlotte, Raleigh, Atlanta, and pre-Katrina New Orleans.3 The city's high level of poverty and low level of educational attainment are deeply rooted in the city and regional economic structure, as well as historic patterns of rural-urban migration and ties to agricultural and industrial development.

These numbers conflict with the stated goals of present-day development efforts to create a niche for Memphis in the globally competitive biotechnology industry and to attract "knowledge workers" to live and work in Memphis. Focusing on appeals to the "creative class," the city now promotes its rich musical heritage, which includes the blues, rock, soul, and rap, and the Beale Street entertainment district in a revitalized downtown to attract tourists, as well as potential residents.4 City business leaders and government officials raise expectations that Memphis will become a "world-class" city with references to enhancing the dynamics of distribution, promoting a revitalized downtown, building sports arenas, expanding the zoo, redeveloping the riverfront, and promoting the city's future as an internationally recognized biomedical research industry.

In terms of infrastructure, city leaders have always treated geographic location as the city's greatest asset. For some time, they have agreed to invest in transportation and logistics. Historically, however, ambivalence about the value of place-based resources, including the downtown urban core, the natural environment, and the labor force, has created local tensions. Today, many Memphis residents and city leaders are reassessing the value of the city's cultural and economic resources for transforming a distressed urban core into the kind of place where people want to live. Efforts to redefine Memphis as a "world-class" city now include public-private partnerships and an array of community-based organizations. New strategies for local economic development raise old questions about social inequality and the regional history of investments and expectations for public education and economic prosperity. Debates continue about how best to allocate and utilize place-specific local material, cultural, and natural resources, to develop an economic structure based not only on the benefits of geographic location and the spirit of entrepreneurialism but also on investments in human capital to enhance economic opportunities and improved life chances for all Memphians.

North America's Distribution Center

Today, the city's most recognizable symbol of the global economy is Federal Express, headquartered in Memphis. The Fortune 500 Blue Ribbon company serves as a local and global icon of entrepreneurialism and the twenty-first-century synergies of technology, innovation, and wealth.5 Last year, the $36 billion global transportation and logistics giant moved more than 7.6 billion tons of cargo through the Memphis airport on 200-plus daily flights and pumped more than $9 billion into the local economy. Moving products in response to global demand, Federal Express handles more than one million packages each night through its Memphis superhub, approximately one-third of FedEx packages shipped worldwide. Because the company dominates the overnight delivery market, Federal Express and the Memphis airport serve as a magnet for high-tech/value-added distribution companies to locate operations in Memphis and the Mid-South.6 The presence of Federal Express also influenced Northwest Airlines' decision to establish a Memphis hub for passenger flights. For more than a decade, Memphis International has been the busiest cargo airport in the world. Local officials credit the airport as being responsible for 166,000 jobs, one out of every four in the region. FedEx employs 32,000 of those transportation workers. The airport drives more than $20 billion in economic activity in the Mid-South region, an impact greater than Atlanta's Hartsfield Jackson International, the busiest passenger airport in the world.7

Less visible than cargo planes flying in and out of Memphis, however, is the transportation and distribution infrastructure that connects Memphis to global markets through a confluence of transportation routes. The port of Memphis is the largest still-water harbor on the Mississippi River and the fourth-largest inland port in the United States. Memphis handles more foreign import tonnage than any inland port in the United States and forms a vital link in the 2,600-mile inland waterway connecting the United States to Mexico via the Mississippi River and the Gulf of Mexico.8

A Memphis-Shelby County Port Commission-supported project, Super Terminal Memphis, is a $350 million multirail freight project designed to streamline rail and truck distribution in the Mid-South and is expected to play a major role in global intermodal container shipping.9 The 155-acre facility is being built in the Frank C. Pidgeon Industrial Park on 3,000 acres of undeveloped land located south of downtown Memphis between I-55 and the Mississippi River. The new terminal will provide a direct route from Memphis to Asia via Canadian National and Prince Rupert City.10 Already, the city is the third-largest rail center in the United States and operates as a hub for five US Class I railroads: Burlington Northern, Santa Fe, Canadian National (which purchased Illinois Central), CSX, Union Pacific, and Norfolk Southern. All major truck lines operate in Memphis. Located at the intersection of I-40 (east-west) and I-55 (north-south), Memphis is positioned at a strategic interstate crossroads in the middle of the United States, midway between Monterrey, Mexico, and Toronto, Canada. A new interstate highway, I-69, the NAFTA superhighway now under development, is mandated to pass through Memphis. Another interstate highway, I-22, will connect Memphis to Birmingham, Alabama. Plans are under way to add a third bridge to cross the Mississippi River at Memphis, serving rail and vehicle traffic.

The city's transportation and distribution infrastructure existed long before FedEx. But in 1973, when Federal Express founder and CEO Fred Smith moved his then-struggling fourteen small-plane delivery service from Little Rock, Arkansas, to his hometown of Memphis, the city experienced local difficulties associated with global processes of deindustrialization and a climate of changing labor relations. Decisions to sell bonds to enhance the area's transportation and distribution infrastructure to recruit FedEx produced benefits for the city and the Mid-South region, as well as the company. In 2007 FedEx signed a new thirty-year lease (the first was signed in 1979) with the Memphis¨CShelby County Airport Authority. FedEx now leases 30.5 million square feet at the airport for hub operations. Substantial agglomerations of distribution and logistics activities have been drawn to the area to take advantage of having the latest possible drop-off times for FedEx overnight delivery and to utilize a concentration of logistics-industry providers in an area that contains more than 155 million square feet of warehouse space and employs more than 10 percent of the workforce in the warehousing and transportation sector. Strategically positioned as the urban center of regional distribution and transportation activities, Memphis claims the sobriquet of "North America's Distribution Center."

The Future of Development

Local economic activities, embedded in global flows and networks, generate unequal outcomes in the city of Memphis. As twenty-first-century city leaders and policymakers ponder how Memphis might enhance its geographic, economic, and social assets to achieve the goal of becoming a "world-class city," they struggle with the historical legacy of slavery, segregation, smoke-stack chasing, environmental contamination, and underinvestment in education. Recognizing that global competitiveness demands more than "selling" natural resources and low-cost labor to attract investments, Memphis business elites face the challenge of attracting new knowledge workers while trying to enhance employment skills and improve health outcomes for existing city residents. Also, recognizing the desirability of a pristine natural environment, leaders must find solutions to environmental degradation produced by earlier generations. Finally, tax incentive and abatement strategies also need to be analyzed more rigorously to assess the public costs and benefits.

Traditional "place wars" that pit Memphis against other cities, especially southern locations, willing to use tax incentives to "sell" local sites have produced questionable local gains for the majority of residents.11 As local leaders endorse more public-private partnerships to foster entrepreneurial strategies, support increased investments in workforce development, and make plans for airport expansion, they find new ways to engage in the "production of locality." Recognizing that Memphis—the place—consists of a unique combination of assets such as geographic location and proximity to rich natural resources, as well as a transportation and distribution infrastructure and a heritage of entrepreneurialism, is positive for economic development. But the legacy of underdevelopment in human capital continues to shape inequality and affects efforts to become a "world-class" city.

4. Richard Florida, The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life (New York: Basic Books, 2002).

5. Blue Ribbon honorees are those selected to at least four of the magazine's exclusive lists. FedEx appears on five in 2005: Fortune 100 Best Companies to Work For, America's Most Admired Companies, World's Most Admired Companies, the Fortune 500, and the Fortune Global 500. The company has won awards for innovation in information technology, including induction into the US Small Business Administration's Golden Anniversary Hall of Fame, as a company that began small and grew into an international leader in its field.